Despite the impacts of Covid-19 and the uncertainty surrounding the prospects for a free trade agreement between the EU and the UK in the coming weeks, it appears that workers in the private sector can look forward to pay rises in excess of 2% next year.

This is according to the latest Willis Towers Watson Salary Budget Planning report.

The average increase is expected to come in at 2.3% compared to a 2.1% rise this year.

There has also been a halving in the proportion of firms that expect to freeze pay next year with 11% of firms saying they may have to implement such a measure, down from 23% this year.

It comes as public sector workers are expected to secure a pay rise in the coming years under proposals published in the last week.

As part of the €900m proposed agreement, around 350,000 staff across the public service are expected to receive general pay increases of 2% over two years.

The Willis Towers Watson report also points to a sectoral shift in the hierarchy of pay increases with those in the high tech sector expected to command the biggest increase next year at 2.8%, followed by pharmaceutical and health service workers at 2.6% and consumer products at 2.5%.

The lowest percentage pay increases are expected in financial services and banking, at 1.7%, and insurance at 1.6%.

That contrasts with the situation in 2020 when personnel in banking, financial services and insurance secured pay increases of around 2.5%.

The projected outcome for Ireland is broadly reflective of elsewhere with a similar picture emerging across Western Europe.

The largest private sector pay increases are expected in the Netherlands, with an average pay rise of 2.5%, followed by the UK and Germany at 2.4%.

"The fact that private sector employers are planning pay increases suggests a focus on talent retention and potential adjustment within their businesses to the conditions of COVID-19 in terms of ways or working, operations and also the buoyancy of their market," Sarah McDonough, Country Lead for Talent & Reward for Willis Towers Watson Ireland said.

"The high-tech sector has long been a successful driver of the Irish economy and expected increase in 2021 salaries combined with recent jobs announcements in Ireland suggest that the increase in e-commerce, remote working and need for technical solutions in 2020 has been positive for the sector," Ms McDonough said.

"Certainly, the increase in average salaries for the pharmaceutical sector suggests growth because of the demands placed by COVID-19," she added.

The Willis Towers Watson Salary Budget Planning report is based on surveys with companies in 130 countries, including over 250 firms in Ireland.